Wednesday, 9 July 2014

Crowd-funding hacks for UK start-ups

We are very fortunate to be able to announce that we have raised £200,000 from over 150 investors, crowd-funding for our bespoke engagement rings business, RarePink.com

Tim Ferris, in his famous post on crowd-funding repeats over and over again that the secret to the success of a large and quick campaign lies in the preparation you do prior to launching.

For us, this meant:
- a business plan with forecasts
- a slide deck
- a video telling our story (for great start-up videos I recommend Sam)
- an email list of friends
- a close team of supporters ready to assist in any way they can
- investment from a few people you know prior to launching your campaign
- a press release about our raise and several others during the campaign
- an outreach strategy to crowd-funding blogs and journalists
- a killer social media campaign to get people excited before, during and even after the the campaign.
- a plan for who will take over some of my responsibilities as CEO.

This last point was a particularly painful lesson as I did not anticipate how much of my time would be needed. If you want to raise a round through crowd-funding expect about 3/4 of your time to be spent on this alone.

Once we launched the campaign I spent more time in the the next few months with potential investors than I did with friends and loved ones.

Some hacks I suggest from this experience:
1. Always ask investors how much they are planning to invest. Avoid meeting those who will invest less than the cost of the time to meet them (and the opportunity cost of meeting someone else).

2. Be careful how you answer questions publicly about your campaign. Tricky ones tend to be about how you can justify your valuation. Be firm in you belief that the company is worth AT LEAST as much as you say it is.

3. Do not get emotional about criticism. Your aim is not to convince everyone, 1% is enough.

4. Ask the people who didn't invest "why not?". Address their issues immediately. Tell other potential investors about the steps you have taken to improve upon these issues.

5. Such is the pressure that I suggest you take regular breaks away from it all to not be overwhelmed. This experience was not too far off from university exam stress, but with much more at stake.

6. Watch what other companies are doing who are competing for investment with you on the same or other platforms. Little tricks, their media features, how they answer questions – all these little insights will help you to adapt and improve your campaign as you go.

7. When asked about how you came to your valuation, you need to have an answer that is ROCK SOLID. Consult with an expert on this and learn your answer off by heart.

8. Post regular updates about your business and successes such as  media features, sales performance etc. Investors will talk to their friends about you more often if they have a cool story to tell. We published interesting themed bespoke engagement ring designs, like this Wimbledon themed one which got picked up by Elle and Glamour magazines.